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MARKET SNAPSHOT: Dow Reclaims 18,000 Level In Clinton Relief Rally

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November 07, 2016

By Sue Chang, MarketWatch , Ryan Vlastelica

S&P 500 on track to snap 9-day losing streak

U.S. stocks jumped Monday, taking part in a global relief rally, after the Federal Bureau of Investigation said its review of a new batch of Democratic presidential nominee Hillary Clinton's emails won't lead to charges.

Gains were broad, with the Dow Jones Industrial Average trading above 18,000 and all of the S&P 500's primary sectors advancing as major indexes rose about 2%. The surge leaves the S&P 500 on track to break a nine-day streak of losses, the longest since 1980. The slide had been attributed partly to polls showing a closer contest between Clinton and Republican rival Donald Trump.

Read: What happens after theS&P 500 falls 9 days in a row? (http://www.marketwatch.com/story/what-happens-after-the-sp-500-falls-9-days-in-a-row-2016-11-04)

The advance is on track to be the largest one-day gain for the S&P 500 since March.

FBI Director James Comey informed lawmakers on Sunday that there were no new findings in the additional emails (http://www.marketwatch.com/story/fbi-review-of-clinton-emails-hasnt-led-to-new-findings-chaffetz-says-2016-11-06) discovered on the computer of former Rep. Anthony Weiner, whose estranged wife is Clinton aide Huma Abedin. News that the FBI had discovered new batch of emails just over a week ago jolted the presidential election race, taking a toll on the Democratic nominee Clinton's lead in polls over Republican Donald Trump.

"The rally is all about Clinton having a better chance of winning, though I don't think the market is celebrating her policies so much as reflecting how markets, like many Americans, are fearful of the unknown that comes with Trump," said James Meyer, chief investment officer at Tower Bridge Advisors.

Financial markets in general view a Clinton win as the better outcome in Tuesday's election, as it presents fewer unknowns and possibly more stability for markets than victory for her rival.

While the day's gains were broad, financials were the biggest advancers. The S&P financial index popped 2.4%, boosted by a 3% rise in shares of Goldman Sachs Group Inc. (GS). J.P. Morgan Chase & Co. (JPM) climbed 3.1% to $69.84.

Read: Here are all possible election outcomes--and how markets will react (http://www.marketwatch.com/story/heres-every-possible-election-outcome-and-every-market-reaction-2016-11-04)

Analysts at Bespoke Investment Group noted that when the S&P 500 is up more than 1% in the first 90 minutes of trading, the index tends to hold on to the momentum and build on the gains for the remainder of the day.

"In the 36 prior occurrences [since 2014], the index has averaged a rest-of-day gain of 0.21% (median: +0.35) with gains more than 70% of the time,' said the analysts in a note.

Despite the rally, the election could remain an overhang of uncertainty until a winner is decided. Investors are also paying close attention to what party will control the Congress and Senate.

See:An unclearelection result would be worst outcome for stocks (http://www.marketwatch.com/story/an-unclear-election-result-would-be-worst-outcome-for-stocks-2016-11-05)

"How markets will perform from today's open through tomorrow's close is anybody's bet," said Meyer. "To the extent Clinton's probability of winning changes, the market will change with it."

But for all the alarming headlines and the market's whiplash swings, Kent Engelke, chief economic strategist at Capitol Securities Management Inc., believes the Clinton-Trump contest pales in comparison to previous elections.

"Regardless of the outcome the country will survive," he said in emailed comments. "All must remember democracy is an angry visceral process filled with vitriol and animosity. Democracy settles its differences with words versus guns."

A revival in appetite for riskier assets triggered a global equity rally, with European stocks up more than 1%. In Asia, the Nikkei 225 index soared 1.6% as the Japanese yen fell against the dollar. The yen and gold are seen as assets that investors turn to in times of economic and political uncertainty.

Read:How the stock market tends to perform on and after Election Day (http://www.marketwatch.com/story/how-the-stock-market-tends-to-perform-on-and-after-election-day-2016-11-07)

Gold was down sharply, after gaining (http://www.marketwatch.com/story/oil-prices-rebound-driven-by-latest-us-political-developments-2016-11-07)2.2% last week (http://www.marketwatch.com/story/gold-marooned-as-traders-brace-for-jobs-report-and-presidential-races-final-days-2016-11-04) on a boost in the polls for Trump. Oil (http://www.marketwatch.com/story/oil-prices-rebound-driven-by-latest-us-political-developments-2016-11-07) rose more than 1%.

The dollar saw big gains, with the ICE Dollar Index , which measures the greenback against a half-dozen rivals, up 0.7%.

The Mexican peso traded at $18.61 to the dollar, versus $19.02 earlier in Asia ahead of the FBI headlines. Many believe a Trump victory would harm the Mexican economy as the candidate has repeatedly promised to raise trade barriers and build a wall on the U.S.-Mexican border.

A reading on consumer credit is the only data due for release on Monday, expected at 3 p.m. Eastern Time.

On the corporate front, third-quarter earnings are trending ahead of Wall Street's estimates. With 88% of S&P 500 companies having announced results, third-quarter earnings are coming in 4% better than analysts' projections, the biggest beat since the second quarter of 2015, according to Savita Subramanian, equity and quant strategist at Bank of America Merrill Lynch.